Verifying the value of Lean Six Sigma programs

To achieve and maintain a competitive position in today's turbulent economy, companies are pursuing a variety of different business improvement initiatives. As long as the enterprise is pursuing continuous improvement, does it really matter which of the various methodologies, ideologies or programs are followed? The short answer is a resounding, “Yes.

By Cindy Jutras

11/01/2009

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To achieve and maintain a competitive position in today's turbulent economy, companies are pursuing a variety of different business improvement initiatives. As long as the enterprise is pursuing continuous improvement, does it really matter which of the various methodologies, ideologies or programs are followed?

The short answer is a resounding, “Yes.”

Aberdeen's 2009 survey of more than 600 business executives finds that those following the true rigors of Lean Six Sigma are better equipped to improve operational performance.

Lean Six Sigma is indeed a tough and demanding program, but when followed with the intended rigor and attention to its finer points, it yields demonstrable results that can be measured in millions of dollars and double digit improvements in profits, quality, and cycle times.

Other continuous improvement and operational excellence programs simply do not produce the same results.

Names aside, it is the true rigor of a Six Sigma program that seems to make the biggest difference.

For those who indicated in the survey that they had Six Sigma programs in place, we asked several other questions to further qualify them, and defined a category we call “True Six Sigma.”

Only 43 percent of those with Six Sigma programs in place qualified for the label “True Six Sigma.” But those that did were far more likely to outperform their peers.

Although we collected data on the average financial result from individual projects, as well as the total financial gains from the start of the initiative, we chose the financial results achieved in the first two years to drive our Best-in-Class criteria. By doing this, we smooth out the difference between newer and very mature implementations.

During the first two years, most companies look for low-hanging fruit in order to produce some immediate and tangible results. Where costs and processes are wildly out of control, these early results can be enormous… and easily gained. For this reason, we temper these savings with the ability to drive those results to the bottom line and improve profits, quality and cycle times.

While we did not require the use of Lean Six Sigma as a criterion for the Best-in-Class, our results clearly show that these management strategies produce more business improvement— and preserving the rigor of Six Sigma produces even more consistent and dramatic results. While all those using Six Sigma and Lean Six Sigma were 1.4 times as likely to be top performers, those respondents that fell into the category of True Six Sigma were more than twice as likely to achieve Best-in-Class status.

By simply comparing the average financial results gained by the Best-in-Class and even the average True Six Sigma program, it's apparent that millions of dollars in savings can be produced.

Manufacturers that have previously confined Lean and Six Sigma efforts to the plant or shop floor should continue their journey to business improvement by bringing the same concepts to front and back office processes. Those in non-manufacturing industries that have yet to begin this journey are encouraged to take those first steps in the journey.

oversees research and client development related to manufacturing at Boston-based AberdeenGroup, and has more than 30 years worth of ERP and supply chain-related experience. Cindy, a former director for a prominent enterprise vendor, has authored numerous white papers as well as a book titled, ERP Optimization.